Types of Real Estate Market

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           The same holds true for an investor as for a first time home buyer to be successful in homeownership, the investor is to understand the market he or she is buying in, understanding his or her mortgage, and knowing what he or she can and cannot handle.

Let’s examine what you need to be concerned with if you want to invest in real estate?  First, the investor must understand his or her market.    There are two different types of market. One type of market is a seller’s market, and the other type of market is the buyer’s market.

In a buyer’s market, the buyer must be aware that being in a buyer’s market doesn’t make the buyer’s job any easier.  It just gives the buyer more flexibility.  Remember in a buyer’s market, there may be several buyers for one property or only one buyer for a property. If there are no other buyers for a property by virtue of the length of time the property has been on the market then a low offer may come in to the seller.  Sorry sellers.  However, sellers that do not mean that you have to give your properties away, but it may mean that you may have to settle for less than you anticipated selling your home. 

Another thing that makes a buyer’s market advantageous to the buyer and not to the seller is that there are a lot of homes to choice from that may meet the buyer’s criteria.

In a seller’s market, on the other hand, the seller has the upper hand.  The seller can price their home significantly above market value and negotiate the purchase price to exact what the seller wants the purchase price to be.  Sorry buyers.  If the buyer really wants a home in a seller’s market, the buyer must succumb to the seller’s terms in order to get the home.  As a matter of fact, in a seller’s market the inventory of homes for sale that may meet the buyer’s criteria are fewer.

Once the investor ascertains the type of market he or she is in then he or she is ready to buy.  Now the investor must determine what type of properties work best for him or her.  By that I mean do you want to purchase single family homes or multi units.   With single family homes, it is very important to determine what will happen if the property is vacant.  The investor must determine if he or she can pay the mortgage if there is a mortgage on top of other expenses if there is not a tenant or the tenant is not paying.  In those calculation must be the upkeep of the building to include utilities and maintenance not only the mortgage, taxes, and insurance.    If that is affordable then move forward.  If not, then look at those options with a multi unit and determine which scenario works better for your financial situation if there are vacancy.  Do not fool yourself there will be vacancy during something of your ownership, so it is best to look at that now than later.

Originally posted 2008-12-16 10:07:18. Republished by Blog Post Promoter

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